Chapter 20: Simple Reproduction

Part 2

VI. The Constant Capital of Department I

It remains for us to analyse the constant capital of department I,
amounting to 4,000c. This value is equal to the value — appearing anew in the commodity-product I — of the means of production consumed in
the creation of this quantity of commodities. This re-appearing value,
which was not produced in the process of production of I, but entered
into it during the preceding year as constant value, as the given value of
its means of production, exists now in the entire part of commodity mass
I not absorbed by category II. And the value of this quantity of commodities
thus left in the hands of the I capitalists equals two-thirds of the
value of their entire annual commodity-product. In the case of the
individual capitalist producing some particular means of production we
could say: He sells his commodity-product; he converts it into money.
By converting it into money he has also reconverted into money the
constant portion of the value of his product. With this portion of value
converted into money he then buys his means of production once more
from other sellers of commodities or transforms the constant portion of
the value of his product into a bodily form in which it can resume its
function of productive constant capital. But now this assumption
becomes impossible. The capitalist class of I comprises the totality of
the capitalists producing means of production. Besides, the commodity-product
of 4,000, which is left on their hands, is a portion of the social
product which cannot be exchanged for any other, because no such
other portion of the annual product remains. With the exception of these
4,000, all the remainder has been disposed of. One portion has been
absorbed by the social consumption-fund, and another portion has to
replace the constant capital of department II, which has already
exchanged everything it could dispose of in an exchange with
department I.

The difficulty is solved very easily if we remember that the entire
commodity-product I in its bodily form consists of means of production,
i.e., of the material elements of the constant capital itself. We meet here
the same phenomenon which we witnessed before under II, only in a
different aspect. In the case of II the entire commodity-product consisted
of articles of consumption. Hence one portion of it, measured by the
wages plus surplus-value contained in this product, could be consumed
by its own producers. Here, in the case of I, the entire product consists
of means of production, of buildings, machinery, vessels, raw and
auxiliary materials, etc. One portion of them, namely that replacing the
constant capital employed in this sphere, can therefore immediately
function anew in its bodily form as a component of the productive
capital: So far as it goes into circulation, it circulates within class I. In II
a part of the commodity-product is individually consumed in kind by its
own producers while in I a portion of the product is productively
consumed in kind by its capitalist producers.

In the part of the commodity-product I equal to 4,000c the
capital-value consumed in this category re-appears, and does so in a
bodily form in which it can immediately resume its function of
productive constant capital. In II that portion of the commodity-product
of 3,000 whose value is equal to the wages plus the surplus-value
(equal to 1,000) passes directly into the individual consumption of the
capitalists and labourers of II, while on the other hand the constant
capital-value of this commodity-product (equal to 2,000) cannot re-enter
the productive consumption of the II capitalists but must be replaced by
exchange with I.

In I, on the contrary, that portion of its commodity-product of 6,000
whose value is equal to the wages plus the surplus-value (equal to
2,000) does not pass into the individual consumption of its producers,
and cannot do so on account of its bodily form. It must first be
exchanged with II. Contrariwise the constant portion of the value of this
product, equal to 4,000, exists in a bodily form in which — taking the
capitalist class I as a whole — it can immediately resume its function of
constant capital of that class. In other words, the entire product of
department I consists of use-values which, on account of their bodily
form, can under a capitalist mode of production serve only as elements
of constant capital. Hence one-third (2,000) of this product of 6,000
replaces the constant capital of department II, and the other two thirds
the constant capital of department I.

The constant capital I consists of a great number of different groups
of capital invested in the various branches of production of means of
production, so much in iron works, so much in coal-mines, etc. Every
one of these groups of capital, or every one of these social group
capitals, is in its turn composed of a larger or smaller number of
independently functioning individual capitals. In the first place, the
capital of society, for instance 7,500 (which may mean millions, etc.) is
composed of various groups of capital; the social capital of 7,500 is
divided into separate parts, every one of which is invested in a special
branch of production; each portion of the social capital-value invested in
some particular branch of production consists, so far as its bodily form is
concerned, partly of means of production required in that particular
sphere of production, partly of the labour-power needed in that business
and trained accordingly, variously modified by division of labour,
according to the specific kind of labour to be performed in each
individual sphere of production. Each portion of social capital invested in
any particular branch of production in its turn consists of the sum of the
individual capitals invested in it and functioning independently. This
patently applies to both departments, I as well as II.

As for the constant capital-value re-appearing in I in the form of its
commodity-product, it re-enters in part as means of production into the
particular sphere of production (or even into the individual business)
from which it emerges as product; for instance corn into the production
of corn, coal into the production of coal, iron in the form of machines
into the production of iron, etc.

However since the partial products constituting the constant capital-value
I do not return directly to their particular or individual sphere of
production, they merely change their place. They pass in their bodily
form to some other sphere of production of department I, while the
product of other spheres of production of department I replaces them in
kind. It is merely a change of place of these products. All of them re-enter
as factors replacing constant capital in I, only instead of the same
group of I they enter another. Since an exchange takes place here
between the individual capitalist of I, it is an exchange of one bodily
form of constant capital for another bodily form of constant capital, of
one kind of means of production for other kinds of means of production.
It is an exchange of the different individual parts of constant capital I
among themselves. Products which do not serve directly as means of
production in their own sphere are transferred from their place of
production to another and thus mutually replace one another. In other
words (similarly to what we saw in the case of the surplus-value II),
every capitalist I draws from this quantity of commodities, proportionally
to his share in the constant capital of 4,000, the means of production
required by him. If production were socialised instead of capitalistic,
these products of department I would evidently just as regularly be
redistributed as means of production to the various branches of this
department, for purposes of reproduction, one portion remaining directly
in that sphere of production from which it emerged as a product,
another passing over to other places of production, thereby giving rise to
a constant to-and-fro movement between the various places of
production in this department.

VII. Variable Capital and Surplus-Value in Both Departments

The total value of the annually produced articles of consumption is
thus equal to the variable capital-value II reproduced during the year
plus the newly produced surplus-value II (i.e., equal to the value
produced by II during the year) plus the variable capital-value I
reproduced during the year and the newly produced surplus-value I (i.e.,
plus the value created by I during the year).

On the assumption of simple reproduction the total value of the
annually produced articles of consumption is therefore equal to the
annual value-product, i.e., equal to the total value produced during the
year by social labour, and this must be so, because in simple
reproduction this entire value is consumed.

The total social working-day is divided into two parts: 1) Necessary
labour which creates in the course of the year a value of 1,500v; 2)
surplus-labour, which creates an additional value, or surplus-value, of
1,500s. The sum of these values, 3,000, is equal to the value of the
annually produced articles of consumption — 3,000. The total value of
the articles of consumption produced during the year is therefore equal
to the total value produced by the total social working-day during the
year, equal to the value of the social variable capital plus the social
surplus-value, equal to the total new product of the year.

But we know that although these two magnitudes of value are equal
the total value of commodities II, the articles of consumption, is not
produced in this department of social production. They are equal
because the constant capital-value re-appearing in II is equal to the
value newly produced by I (value of variable capital plus surplus-value);
therefore I(v + s) can buy the part of the product of II which represents
the constant capital-value for its producers (in department II). This
shows, then, why the value of the product of capitalists II, from the point
of view of society, may be resolved into v + s although for these
capitalists it is divided into c + v + s. This is so only because IIc is here
equal to I(v + s), and because these two components of the social product
interchange their bodily forms by exchange, so that after this
transformation II exists once more in means of production and I(v + s) in
articles of consumption.

And it is this circumstance which induced Adam Smith to maintain
that the value of the annual product resolves itself into v + s. This is
true 1) only for that part of the annual product which consists of articles
of consumption; and 2) it is not true in the sense that this total value is
produced in II and that the value of its product is equal to the value of
the variable capital advanced in II plus the surplus-value produced in II.
It is true only in the sense that II(c + v + s) is equal to II(v + s) + I(v + s), or because II is equal to I(v + s).

It follows furthermore:

The social working-day (i.e., the labour expended by the entire
working-class during the whole year), like every individual working-day,
breaks up into only two parts, namely into necessary labour and surplus-labour,
and the value produced by this working-day consequently
likewise resolves itself into only two parts, namely into the value of the
variable capital, or that portion of the value with which the labourer
buys the means of his own reproduction, and the surplus-value which
the capitalist may spend for his own individual consumption.
Nevertheless, from the point of view of society, one part of the social
working-day is spent exclusively on the production of new constant
capital, namely of products exclusively intended to function as means of
production in the labour-process and hence as constant capital in the
accompanying process of self-expansion of value. According to our
assumption the total social working-day presents itself as a money-value
of 3,000, only one-third of which, or 1,000, is produced in department
II which manufactures articles of consumption, that is, the commodities
in which the entire value of the variable capital and the entire surplus-value
of society are ultimately realised. Thus, according to this
assumption, two-thirds of the social working-day are employed in the
production of new constant capital. Although from the standpoint of the
individual capitalists and labourers of department I these two-thirds of
the social working-day serve merely for the production of variable
capital-value plus surplus-value, the same as the last third of the social
working-day in department II, still from the point of view of society and
likewise of the use-value of the product, these two-thirds of the social
working-day produce only replacement of constant capital in the process
of productive consumption or already so consumed. Also when viewed
individually these two-thirds of the working-day, while producing a total
value equal only to the value of the variable capital plus surplus-value
for the producer, nevertheless do not produce any use-values of a kind
on which wages or surplus-value could be expended; for their products
are means of production.

It must be noted in the first place that no portion of the social
working-day, whether in I or in II, serves for the production of the value
of the constant capital employed and functioning in these two great
spheres of production. They produce only additional value, 2,000 I(v + s)
+ 1,000 II(v + s), in addition to the value of the constant capital equal to
4,000 Ic + 2,000 IIc. The new value produced in the form of means of production is not yet constant capital. It merely is intended to function
as such in the future.

The entire product of II — the articles of consumption — viewed
concretely as a use-value, in its bodily form, is a product of the one-third
of the social working-day spent by II. It is the product of labour in its
concrete form — such as the labour of weaving, baking, etc., performed in
this department — the product of this labour, inasmuch as it functions as
the subjective element of the labour-process. As to the constant portion
of the value of this product II, it re-appears only in a new use-value, in a
new bodily form, the form of articles of consumption, while it existed
previously in the form of means of production. Its value has been
transferred by the labour-process from its old bodily form to its new
bodily form. But the value of these two-thirds of the product-value,
equal to 2,000, has not been produced in this year’s self-expansion
process of II.

Just as from the point of view of the labour-process, the product of II
is the result of newly functioning living labour and of the assumed
means of production assigned to it, in which that labour materialises
itself as in its objective conditions, so, from the point of view of the
process of self-expansion, the value of the product of II, equal to 3,000,
is composed of a new value (500v + 500s = 1,000) produced by the newly added one-third of the social working-day and of a constant value
in which are embodied two-thirds of a past social working-day that had
elapsed before the present process of production of II here under
consideration. This portion of the value of the II product finds expression
in a portion of the product itself. It exists in a quantity of articles of
consumption worth 2,000, or two-thirds of a social working-day. This is
the new use-form in which this value-portion re-appears. The exchange
of part of the articles of consumption equal to 2,000 IIc for means of
production of I equal to I (1,000v + l,000s) thus really represents an exchange of two-thirds of an aggregate working-day — which do not constitute any portion of this year’s labour, and elapsed before this year — for two-thirds of the working-day newly added this year. Two-thirds of this
year’s social working-day could not be employed in the production of
constant capital and at the same time constitute variable capital-value
plus surplus-value for their own producers unless they were to be
exchanged for a portion of the value of the annually consumed articles of
consumption, in which are incorporated two-thirds of a working-day
spent and realised before this year. It is an exchange of two-thirds of this
year’s working-day for two-thirds of a working-day spent before this year,
an exchange of this year’s labour-time for last year’s. This explains the
riddle of how the value-product of an entire social working-day can
resolve itself into variable capital-value plus surplus-value, although two-thirds
of this working-day were not expended in the production of
articles in which variable capital or surplus-value can be realised, but
rather in the production of means of production for the replacement of
the capital consumed during the year. The explanation is simply that
two-thirds of the value of the product of II, in which the capitalists and
labourers of I realise the variable capital-value plus surplus-value
produced by them (and which constitute two-ninths of the value of the
entire annual product), are, so far as their value is concerned, the
product of two-thirds of a social working-day of a year prior to the
current one.

The sum of the social product I and II — means of production and
articles of consumption — is indeed, viewed from the standpoint of their
use-value, in their concrete, bodily form, the product of this year’s
labour, but only to the extent that this labour itself is regarded as useful
and concrete and not as an expenditure of labour-power, as value-creating
labour. And even the first is true only in the sense that the
means of production have transformed themselves into new products,
into this year’s products solely by dint of the living labour added on to
them, operating on them. On the contrary, this year’s labour could not
have transformed itself into products without means of production
independent of it, without instruments of labour and materials of
production.

VIII. The Constant Capital in Both Departments

The analysis of the total value of the product of 9,000, and of the
categories into which it is divided, does not present any greater difficulty
than that of the value produced by an individual capital. On the contrary,
they are identical.

The entire annual social product here contains three social working-days,
each of one year. The value expressed by each one of these
working-days is 3,000, so that the value expressed by the total product
is equal to 3 × 3,000, or 9,000.

Furthermore the following portions of this working time have elapsed
prior to the one-year process of production, the product of which we are
now analysing: In department I four-thirds of a working-day (with a
product worth 4,000), and in department II two-thirds of a working-day
(with a product worth 2,000), making a total of two social working-days
with a product worth 6,000. For this reason 4,000 Ic + 2,000 IIc = 6,000c figure as the value of the means of production, or the constant capital-value re-appearing in the total value of the social product.
Furthermore one-third of the social working-day of one year newly
added in department I is necessary labour, or labour replacing the value
of the variable capital of 1,000 I and paying the price of the labour
employed by I. In the same way one-sixth of a social working-day in II is
necessary labour with a value of 500. Hence 1,000 Iv + 500 IIv = 1,500v, expressing the value of one half of the social working-day, is the
value-expression of the first half of the aggregate working-day added this
year and consisting of necessary labour.

Finally, in department I one-third of the aggregate working-day, with
a product worth 1,000, is surplus-labour, and in department II one-sixth
of the working-day, with a product worth 500, is surplus-labour.

Together they constitute the other half of the added aggregate working-day.
Hence the total surplus-value produced is equal to l,000 Is + 500
IIs, or 1,500s.

Thus:

The constant capital portion of the value of the social product (c):
Two working-days expended prior to the process of
production; expression of value = 6,000.

Necessary labour (v) expended during the year:
One half of a working-day expended on the annual
production; expression of value 1,500.

Surplus-labour (s) expended during the year:
One half of a working-day expended on the annual
production; expression of value = 1,500.

The difficulty, then, does not consist in the analysis of the value of
the social product itself. It arises in the comparison of the component
parts of the value of the social product with its material constituents.

The constant, merely re-appearing portion of value is equal to the
value of that part of this product which consists of means of production
and is incorporated in that part.

The new value-product of the year, equal to v + s, is equal to the
value of that part of this product which consists of articles of
consumption and is incorporated in it.

But with exceptions of no consequence here, means of production
and articles of consumption are wholly different kinds of commodities,
products of entirely different bodily or use-forms, and, therefore,
products of wholly different classes of concrete labour. The labour which
employs machinery in the production of means of subsistence is vastly
different from the labour which makes machinery. The entire aggregate
annual working-day, whose value-expression is 3,000, seems spent in
the production of articles of consumption equal to 3,000, in which no
constant portion of value re-appears, since these 3,000, equal to 1,500v
+ 1,500s, resolve themselves only into variable capital-value and
surplus-value. On the other hand the constant capital-value of 6,000 re-appears
in a class of products quite different from articles of
consumption, namely in means of production, while as a matter of fact
no part of the social working-day seems spent in the production of these
new products. It seems rather that the entire working-day consists only
of classes of labour which do not result in means of production but in
articles of consumption. This mystery has already been cleared up. The
value-product of the year’s labour is equal to the value of the products of
department II, to the total value of the newly produced articles of
consumption. But the value of these products is greater by two-thirds
than that portion of the annual labour which has been expended in the
sphere of production of articles of consumption (department II). Only
one-third of the annual labour has been expended in their production.
Two-thirds of this annual labour have been expended in the production
of means of production, that is to say, in department I. The value-product
created during this time in I, equal to the variable capital-value
plus surplus-value produced in I, is equal to the constant-capital-value of
II re-appearing in articles of consumption of II. Hence they may be
mutually exchanged and replaced in kind. The total value of the articles
of consumption of II is therefore equal to the sum of the new value-product
of I and II, or II(c + v + s) equal to I(v + s) + II(v + s), hence equal to the sum of the new values produced by the year’s labour in the form of v plus s.

On the other hand the total value of the means of production (I) is
equal to the sum of the constant capital-value re-appearing in the form
of means of production (I) and in that of articles of consumption (II); in
other words, equal to the sum of the constant capital-value re-appearing
in the total product of society. This total value is equal in terms of value
to four-thirds of a working-day preceding the process of production of I
and two-thirds of a working-day preceding the process of production of
II, in all equal to two aggregate working-days.

The difficulty with the annual social product arises therefore from the
fact that the constant portion of value is represented by a wholly
different class of products — means of production — than the new value v
+ s added to this constant portion of value and represented by articles
of consumption. Thus the appearance is created, so far as value is
concerned, that two-thirds of the consumed mass of products are found
again in a new form as new product, without any labour having been
expended by society in their production. This is not so in the case of an
individual capital. Every individual capitalist employs some particular
concrete kind of labour, which transforms the means of production
peculiar to it into a product. Let for instance the capitalist be a machine-builder,
the constant capital expended during the year 6,000c, the
variable 1,500v, the surplus-value 1,500s, the product 9,000, the product, say, 18 machines of 500 each. The entire product here exists
in the same form, that of machines. (If he produces various kinds, each
kind is calculated separately.) The entire commodity-product is the result
of the labour expended during the year in machine-building; it is a
combination of the same concrete kind of labour with the same means
of production. The various portions of the value of the product therefore
present themselves in the same bodily form: 12 machines embody
6,000c, 3 machines 1,500v, 3 machines 1,500s. In the present case it is evident that the value of the 12 machines is equal to 6,000c, not because there is incorporated in these 12 machines only labour
performed previously to the manufacture of these machines and not
labour expended on building them. The value of the means of production
for 18 machines did not of itself become transformed into 12 machines
but the value of these 12 machines (consisting itself of 4,000c + 1,000v + 1,000s) is equal to the total value of the constant capital contained in the 18 machines. The machine-manufacturer must therefore sell 12 of
the 18 machines in order to replace his expended constant capital,
which he requires for the reproduction of 18 new machines. On the
contrary, the thing would be inexplicable if in spite of the fact that the
labour expended was employed solely in the manufacture of machines,
the result were to be: On the one hand 6 machines equal to 1,500v +
1,500s, on the other iron, copper, screws, belts, etc., of a value amounting
to 6,000c, i.e., the means of production of the machines in their
bodily form, which, as we know, the individual machine-building
capitalist does not produce himself but must replace by way of the
process of circulation. And yet it seems at first glance that the
reproduction of the annual product of society takes place in this absurd
way.

The product of an individual capital, i.e., of every fraction of the
social capital endowed with a life of its own and functioning
independently, has a bodily form of one kind or another. The only
condition is that this product must really have a use-form, a use-value,
which gives it the imprint of a member of the world of commodities
capable of circulation. It is immaterial and accidental whether or not it
can re-enter as a means of production into the same process of
production from which it emerged as a product; in other words, whether
the portion of its value representing the constant part of the capital has a
bodily form in which it can actually function again as constant capital. If
not, this portion of the value of the product is reconverted into the form
of its material elements of production by means of sale and purchase
and thus the constant capital is reproduced in the bodily form capable of
functioning.

It is different with the product of the aggregate social capital. All the
material elements of reproduction must in their bodily form constitute
parts of this product. The consumed constant part of capital can be
replaced by the aggregate production only to the extent that the entire
constant part of the capital reappearing in the product re-appears in the
bodily form of new means of production which can really function as
constant capital. Hence, simple reproduction being assumed, the value
of that portion of the product which consists of means of production
must be equal to the constant portion of the value of social capital.

Furthermore: Considered individually, the capitalist produces in the
value of his product by means of the newly added labour only his
variable capital plus surplus-value, while the constant part of the value
is transferred to the product owing to the concrete character of the newly
added labour.

Considered socially that portion of the social working-day which
produces means of production, hence adding new value to them as well
as transferring to them the value of the means of production consumed
in their manufacture, creates nothing but new constant capital intended
to replace that consumed in the shape of old means of production in
both departments I and II. It creates only product intended for productive
consumption. The entire value of this product, then, is only value which
can function anew as constant capital, which can only buy back
constant capital in its bodily form, and which, for this reason, resolves
itself, considered socially, neither into variable capital nor surplus-value.
On the other hand that part of the social working-day which produces
articles of consumption does not create any portion of the social
replacement capital. It creates only products intended, in their bodily
form, to realise the value of the variable capital and surplus-value of I
and II.

Speaking of the point of view of society, and therefore considering the
aggregate product of society, which comprises both the reproduction of
social capital and individual consumption, we must not lapse into the
manner copied by Proudhon from bourgeois economy and look upon this
matter as though a society with a capitalist mode of production, if
viewed en bloc, as a totality, would lose this its specific historical and
economic character. No, on the contrary. We have, in that case, to deal
with the aggregate capitalist. The aggregate capital appears as the
capital stock of all individual capitalists combined. This joint-stock
company has in common with many other stock companies that
everyone knows what he puts in, but not what he will get out of it.

IX. A Retrospect to Adam Smith, Storch, and Ramsay

The aggregate value of the social product amounts to 9,000, equal to
6,000c + 1,500c + 1,500s, i.e., 6,000 reproduce the value of the means of production and 3,000 that of the articles of consumption. The
value of the social revenue (v + s) amounts therefore to only one-third of
the value of the aggregate product, and the totality of consumers,
labourers as well as capitalists, can draw commodities, products out of
the total social product and incorporate them in their consumption-fund
only to the amount of this one-third. On the other hand 6,000, or two-thirds,
of the value of the product, are the value of the constant capital
which must be replaced in kind. Means of production to this amount
must therefore again be incorporated in the production-fund. Storch
recognised this as essential without being able to prove it:

“It is clear that the value of the annual product is divided partly into capital and partly into profits, and that each one of these portions of the value of the
annual product is regularly employed in buying the products which the
nation needs both for the maintenance of its capital and for replenishing
its consumption-fund... . The products which constitute the capital of a
nation are not to be consumed.” (Storch, Considèrations sur la nature du revenu national Paris, 1824, pp. 134-35, 150.)

Adam Smith, however, has promulgated this astounding dogma,
which is believed to this day, not only in the previously mentioned form,
according to which the entire value of the social product resolves itself
into revenue, into wages plus surplus-value, or, as he expresses it, into
wages plus profit (interest) plus ground-rent, but also in the still more
popular form, according to which the consumers must “ultimately” pay
to the producers the entire value of the product. This is to this day one
of the best-established commonplaces, or rather eternal truths, of the so-called
science of political economy. This is illustrated in the following
plausible manner: Take any article, for instance a linen shirt. First, the
spinner of linen yarn has to pay the flax-grower the entire value of the
flax, i.e., the value of flax-seed, fertilisers, labouring cattle feed, etc.,
plus that part of the value which the fixed capital, such as buildings,
agricultural implements, etc., of the flax-grower gives up to the product;
the wages paid in the production of the flax; the surplus-value (profit,
ground-rent) embodied in the flax; finally the carriage costs of the flax
from its place of production to the spinnery. Next, the weaver has to
reimburse the spinner of the linen yarn not only for the price of the flax,
but also for that portion of the value of machinery, buildings, etc., in
short of the fixed capital, which is transferred to the flax; furthermore, all
the auxiliary materials consumed in the spinning process, the wages of
the spinners, the surplus-value, etc., and so the thing goes on with the
bleacher, the transportation costs of the finished linen, and finally the
shirtmaker, who has to pay the entire price of all preceding producers,
who supplied him only with his raw material. In his hands a further
addition of value takes place, partly through the value of constant capital
consumed in the manufacture of shirts in the shape of instruments of
labour, auxiliary materials, etc., and partly through the labour expended,
which adds the value of the shirtmakers’ wages plus the surplus-value of
the shirt manufacturer. Now let this entire product in shirts cost
ultimately £100 and let this be the aliquot part of the value of the total
annual product expended by society on shirts. The consumers of the
shirts pay these £100, i.e., the value of all the means of production
contained in the shirts, and of the wages plus surplus-value of the flax-grower,
spinner, weaver, bleacher, shirt manufacturer, and all carriers.
This is absolutely correct. Indeed, every child can see that. But then it
says: that’s how matters stand with regard to the value of all other
commodities. It should say: That’s how matters stand with regard to the
value of all articles of consumption, with regard to the value of that
portion of the social product which passes into the consumption-fund,
i.e., with regard to that portion of the value of the social product which
can be expended as revenue. True enough, the sum of the values of all
these commodities is equal to the value of all the means of production
(constant portions of capital) used up in them plus the value created by
the labour last added (wages plus surplus-value). Hence the totality of
the consumers can pay for this entire sum of values because, although
the value of each individual commodity is made up of c + v + s,
nevertheless the sum of the values of all commodities passing into the
consumption-fund, taken at its maximum, can be equal only to that
portion of the value of the social product which resolves itself into v + s,
in other words, equal to that value which the labour expended during the
year has added to the existing means of production — i.e., to the value of
the constant capital. As for the value of the constant capital, we have
seen that it is replaced out of the mass of social products in a two-fold
way. First, through an exchange by capitalists II, who produce articles of
consumption, with capitalists I, who produce the means of production
for them. And here is the source of the saying that what is capital for the
one is revenue for the other. But this is not the actual state of affairs.
The 2,000 IIc existing in the shape of articles of consumption worth
2,000 constitute a constant capital-value for the capitalist class of II.
They therefore cannot consume this value themselves, although the
product in accordance with its bodily form is intended for consumption.
On the other hand, the 2,000 I(v + s) are wages plus surplus-value
produced by capitalist and working-class I. They exist in the bodily form
of means of production, of things in which their own value cannot be
consumed. We have here, then, a sum of values to the amount of
4,000, one half of which, before and after the exchange, replaces only
constant capital, while the other half forms only revenue.

In the second place the constant capital of department I is replaced
in kind, partly by exchange among capitalists I, partly by replacement in
kind in each individual business.

The phrase that the value of the entire annual product must
ultimately be paid by the consumer would be correct only if consumer
were taken to comprise two vastly different kinds: individual consumers
and productive consumers. However that one portion of the product
must be consumed productively means nothing but that it must function as capital and not be consumed as revenue.

If we divide the value of the aggregate product, equal to 9,000, into
6,000c + l,500v + 1,500s and look upon the 3,000(v + s) only in its quality of revenue, then, on the contrary, the variable capital seems to disappear and capital, socially speaking, to consist only of constant
capital. For that which appeared originally as 1,500v has resolved itself
into a portion of the social revenue, into wages, the revenue of the
working-class, and its character of capital has thus vanished. This
conclusion is actually drawn by Ramsay. According to him, capital,
socially considered, consists only of fixed capital, but by fixed capital be
means the constant capital, that quantity of values which consists of
means of production, whether these means of production are
instruments or materials of labour, such as raw materials, semi-finished
products, auxiliary materials, etc. He calls the variable capital circulating
capital:

“Circulating capital consists exclusively of subsistence and other necessaries advanced to the workmen, previous to the completion of the
produce of their labour... Fixed capital alone, not circulating, is properly
speaking a source of national wealth... Circulating capital is not an
immediate agent in production, nor even essential to it at all, but merely
a convenience rendered necessary by the deplorable poverty of the mass
of the people... Fixed capital alone constitutes an element of cost of
production in a national point of view.” (Ramsay, l.c., pp. 23 to 26,
passim.)

Ramsay defines fixed capital, by which he means constant capital, more closely in the following words:

“On the length of time during which any portion of the product of that labour” (namely labour bestowed on any commodity) “has existed as fixed capital; that is, in a form in which, though assisting to raise the future commodity, it does not maintain labourers.” Ibid., p. 59.)

Here we see once more the calamity Adam Smith brings on by
submerging the distinction between constant and variable capital in that
between fixed capital and circulating capital. Ramsay’s constant capital
consists of instruments of labour, his circulating capital of means of
subsistence. Both of them are commodities of a given value. The one
can no more create surplus-value than the other.

X. Capital and Revenue: Variable Capital and Wages

The entire annual reproduction, the entire product of a year is the
product of the useful labour of that year. But the value of this total
product is greater than that portion of the value in which the annual
labour, the labour-power expended during the current year, is
incorporated. The value-product of this year, the value newly created
during this period in the form of commodities, is smaller than the value
of the product, the aggregate value of the mass of commodities
fabricated during the entire year. The difference obtained by deducting
from the total value of the annual product that value which was added
to it by the labour of the current year, is not really reproduced value but
only value re-appearing in a new form of existence. It is value transferred
to the annual product from value existing prior to it, which may be of an
earlier or later date, according to the durability of the components of the
constant capital which have participated in that year’s social labour-process,
a value which may originate from the value of means of
production which came into the world the previous year or in a number
of years even previous to that. It is by all means a value transferred from
means of production of former years to the product of the current year.

Take our scheme. We have, after the exchange of the elements
hitherto considered between I and II, and within II.

Value newly produced during the year is contained only in v and s.
The sum of the value-product of this year is therefore equal to the sum
of v + s, or 2,000 I(v + s) + 1,000 II(v + s) = 3,000. All remaining value-parts of the product of this year are merely value transferred from the
value of earlier means of production consumed in the annual production.
The current annual labour has not produced any value other than that of
3,000. That represents its entire annual value-product.

Now, as we have seen, the 2,000 I(v + s) replace for class II its 2,000
IIc in the bodily form of means of production. Two-thirds of the annual
labour, then, expended in category I, have newly produced constant
capital II, both its entire value and its bodily form. From the standpoint
of society, two-thirds of the labour expended during the year have
created new constant capital-value realised in the bodily form
appropriate for department II. Thus the greater portion of the annual
labour of society has been spent in the production of new constant
capital (capital-value existing in the form of means of production) in
order to replace the value of the constant capital expended in the
production of articles of consumption. What distinguishes capitalist
society in this case from the savage is not, as Senior[1] thinks, the privilege and peculiarity of the savage to expend his labour at times in a way that does not procure him any products resolvable (exchangeable) into revenue, i.e., into articles of consumption. No, the distinction
consists in the following.

a) Capitalist society employs more of its available annual labour in
the production of means of production (ergo, of constant capital) which
are not resolvable into revenue in the form of wages or surplus-value, but
can function only as capital.

b) When a savage makes bows, arrows, stone hammers, axes,
baskets, etc., he knows very well that he did not spend the time so
employed in the production of articles of consumption, but that he has
thus stocked up the means of production he needs, and nothing else.
Furthermore, a savage commits a grave economic sin by his utter
indifference to waste of time, and, as Tylor [2] tells us, takes sometimes a whole month to make one arrow.

The current conception whereby some political economists seek to
extricate themselves from the theoretical difficulty, i.e., the
understanding of the real interconnections — that what is capital to one is
revenue to another, and vice versa — is only partially correct and
becomes utterly wrong (harbours therefore a complete misunderstanding
of the entire process of exchange taking place in annual reproduction,
hence also a misunderstanding of the actual basis of the partially
correct) as soon as the character of universality is attributed to it.

We now summarise the actual relations on which the partial
correctness of this conception rests, and in doing so the wrong
conception of these relations will come to the surface.

1) The variable capital functions as capital in the hands of the
capitalist and as revenue in the hands of the wage-worker.

The variable capital exists at first in the hands of the capitalist as
money-capital; and it performs the function of money-capital, by his buying labour-power with it. So long as it persists in his hands in the
form of money, it is nothing but a given value existing in the form of
money; hence a constant and not a variable magnitude. It is a variable
capital only potentially, owing to its convertibility into labour-power. It
becomes real variable capital only after divesting itself of its money-form,
after being converted into labour-power functioning as a component part
of productive capital in the capitalist process.

Money, which first functioned as the money-form of the variable
capital for the capitalist, now functions in the hands of the labourer as
the money-form of his wages, which he exchanges for means of
subsistence; i.e., as the money-form of revenue derived from the
constantly repeated sale of his labour-power.

We have here but the simple fact that the money of the buyer, in this
case the capitalist, passes from his hands into those of the seller, in this
case the seller of labour-power, the labourer. It is not a case of the
variable capital functioning in a dual capacity, as capital for the
capitalist and as revenue for the labourer. It is the same money which exists first in the hands of the capitalist as the money-form of his variable capital, hence as potential variable capital, and which serves in the hands of the labourer as an equivalent
for sold labour-power as soon as the capitalist converts it into labour-power.
But the fact that the same money serves another useful purpose
in the hands of the seller than in those of the buyer is a phenomenon
peculiar to the purchase and sale of all commodities.

Apologetic economists present the matter in a wrong light, as is best
seen if we keep our eyes fixed exclusively, without taking for the time
being any notice of what follows, on the act of circulation M — L (equal
to M — C), the conversion of money into labour-power on the part of the
capitalist buyer, which is L — M (equal to C — M), the conversion of the
commodity labour-power into money on the part of the seller, the
labourer. They say: Here the same money realises two capitals; the
buyer — the capitalist — converts his money-capital into living labour-power, which he incorporates in his productive capital; on the other hand the
seller, the labourer, converts his commodity, labour-power, into money,
which he spends as revenue, and this enables him to keep on reselling
his labour-power and thereby to maintain it. His labour-power, then,
represents his capital in commodity-form, which yields him a continuous
revenue. Labour-power is indeed his property (ever self-renewing, reproductive),
not his capital. It is the only commodity which he can and
must sell continually in order to live, and which acts as capital (variable)
only in the hands of the buyer, the capitalist. The fact that a man is
continually compelled to sell his labour-power, i.e., himself, to another
man proves, according to those economists, that he is a capitalist,
because he constantly has “commodities” (himself) for sale. In that
sense a slave is also a capitalist, although he is sold by another once
and for all as a commodity; for it is in the nature of this commodity, a
labouring slave, that its buyer does not only make it work anew every
day, but also provides it with the means of subsistence that enable it to
work ever anew. (Compare on this point Sismondi and Say in the letters
to Malthus.[3] )

2) And so, in the exchange of 1,000 Iv + 1,000 Is for 2,000 IIc, what is constant capital for some (2,000 IIc) becomes variable capital and surplus-value, hence generally revenue, for the others; and what is
variable capital and surplus-value (2,000 I(v + s)), hence generally revenue
for some becomes constant capital for the others.

Let us first look at the exchange of Iv for IIc, beginning with the point of view of the labourer.

The collective labourer of I has sold his labour-power to the collective
capitalist of I for 1,000; he receives this value in money, paid in the
form of wages. With this money he buys from II articles of consumption
for the same amount of value. Capitalist II confronts him only as a seller
of commodities, and nothing else, even if the labourer buys from his own
capitalist, as he does for instance in the exchange of 500 IIv, as we have
seen above (Part IV, present chapter). The form of circulation through
which his commodity, labour-power, passes, is that of the simple
circulation of commodities for the mere satisfaction of needs, for the purpose
of consumption: C (labour-power) — M — C (articles of consumption,
commodities II). The result of this act of circulation is that the labourer
maintains himself as labour-power for capitalist I, and in order to
continue maintaining himself as such he must continually renew the
process L(C) — M — C. His wages are realised in articles of consumption,
they are spent as revenue, and, taking the working-class as a whole, are
spent again and again as revenue.

Now let us look at the same exchange of Iv for IIc, from the point of view of the capitalist. The entire commodity-product of II consists of
articles of consumption, hence of things intended to enter into annual
consumption, hence to serve in the realisation of revenue for someone,
in the present case for the collective labourer I. But for the collective
capitalist II one portion of his commodity-product, equal to 2,000, is
now the form of the constant capital-value of his productive capital
converted into commodities. This productive capital must be reconverted
from this commodity-form into its bodily form, in which it may act again
as the constant portion of a productive capital. What capitalist II has
accomplished so far is that he has reconverted by means of sales to
labourers I one half (equal to 1,000) of his constant capital-value, which
had been reproduced in the shape of commodities (articles of
consumption), into the form of money. Hence it is not the variable
capital Iv, which has been converted into this first half of the constant
capital-value IIc, but simply the money which functioned for I as money-capital in the exchange for labour-power and thus came into the possession
of the seller of labour-power, to whom it does not represent capital
but revenue in the form of money, i.e., it is spent as a means of
purchase of articles of consumption. Meanwhile, the money amounting
to 1,000, which has come into the hands of the II capitalists from
labourers of I, cannot function as the constant element of productive
capital II. It is only as yet the money-form of his commodity-capital to be
commuted into fixed or circulating constituents of constant capital. So II
buys with the money received from the labourers of I, the buyers of its
commodities, means of production from I to the amount of 1,000. In
this way the constant capital-value II is renewed to the extent of one half
of its total amount in its bodily form, in which it can function once more
as an element of productive capital II. The circulation in this instance
took the course C — M — C: articles of consumption worth 1,000 — money to the amount of 1,000 — means of production worth 1,000.

But C — M — C represents here the movement of capital. C, when sold
to the labourers, is converted into M, and this M is converted into means
of production. It is the reconversion of commodities into the material
elements of which this commodity is made. On the other hand just as
capitalist II acts vis-à-vis I only as a buyer of commodities, so capitalist I
acts only as a seller of commodities vis-à-vis II. I originally bought
labour-power worth 1,000 with 1,000 in money intended to function as
variable capital. It has therefore received an equivalent for the 1,000v
which it expended in money-form. This money now belongs to the
labourer who spends it in purchases from II. I cannot get back this
money, which thus found its way into the II treasury unless it fishes its way
out of it again by the sale of commodities of the same value.

I first had a definite sum of money amounting to 1,000 destined to
function as variable capital. The money functions as such by its
conversion into labour-power of the same value. But the labourer
supplied it as a result of the process of production with a quantity of
commodities (means of production) worth 6,000, of which one-sixth, or
1,000, are equivalent to the variable portion of capital advanced in
money. The variable capital-value functions no more as variable capital
now in its commodity-form than it did before in its form of money. It can
do so only after its conversion into living labour-power, and only so long
as this labour-power functions in the process of production. As money
the variable capital-value was only potential variable capital. But it had
a form in which it was directly convertible into labour-power. As a
commodity the same variable capital-value is still potential money-value,
it is restored to its original money-form only by the sale of the commodities,
and therefore by II buying for 1,000 commodities from I. The
movement of the circulation is here as follows: 1,000v (money) — labour-power worth 1,000 — 1,000 in commodities (equivalent of the variable
capital) — 1,000v (money); hence M — C... C — M (equal to M — L ... C — M). The process of production intervening between C ... C does not itself belong in the sphere of circulation. It does not figure in the mutual
exchange of the various elements of the annual reproduction, although
this exchange includes the reproduction of all the elements of productive
capital, the constant elements as well as the variable element (labour-power).
All the participants in this exchange appear either as buyers or
sellers or both. The labourers appear only as buyers of commodities, the
capitalists alternately as buyers and sellers, and within certain limits
either only as buyers of commodities or only as sellers of commodities.

Result: I possesses once more the variable value-constituent of its
capital in the form of money, from which alone it is directly convertible
into labour-power, i.e., it once more possesses the variable capital-value
in the sole form in which it can really be advanced as a variable element
of its productive capital. On the other hand the labourer must again act
as a seller of commodities, of his labour-power, before he can act again
as a buyer of commodities.

So far as the variable capital of category II (500 IIv) is concerned, the
process of circulation between the capitalists and labourers of the same
class of production takes place directly, since we look upon it as taking
place between the collective capitalist II and the collective labourer II.

The collective capitalist II advances 500v for the purchase of labour-power
of the same value. In this case the collective capitalist is a buyer,
the collective labourer a seller. Thereupon the labourer appears with the
proceeds of the sale of his labour-power to act as a buyer of a part of the
commodities produced by himself. Here the capitalist is therefore a
seller. The labourer has replaced to the capitalist the money paid in the
purchase of his labour-power by means of a portion of commodity-capital
II produced, namely 500v in commodities. The capitalist now
holds in the form of commodities the same v which he had in the form
of money before its conversion into labour-power, while the labourer on
the other hand has realised the value of his labour-power in money and
now, in his turn, realises this money by spending it as his revenue to
defray his consumption in the purchase of part of the articles of
consumption produced by himself. It is an exchange of the revenue of
the labourer in money for a portion of commodities he has himself
reproduced, namely 500v of the capitalist. In this way this money
returns to capitalist II as the money-form of his variable capital. An
equivalent value of revenue in the form of money here replaces variable
capital-value in the form of commodities.

The capitalist does not increase his wealth by taking away again the
money paid by him to the labourer in the purchase of labour-power
when he sells him an equivalent quantity of commodities. He would
indeed be paying the labourer twice if he were to pay him first 500 in
the purchase of his labour-power, and then in addition give him gratis a
quantity of commodities worth 500, which the labourers produced for
him. Vice versa, if the labourer were to produce for him nothing but an
equivalent in commodities worth 500 for the price of his labour-power of
500, the capitalist would be no better off after the transaction than
before. But the labourer has reproduced a product of 3,000. He has
preserved the constant portion of the value of the product, i.e., the value
of the means of production used up in it to the amount of 2,000 by
converting them into a new product. He has furthermore added to this
given value a value of 1,000(v + s). (The idea that the capitalist grows
richer in the sense that he wins a surplus-value by the reflux of the 500
in money is developed by Destutt de Tracy, as shown in detail in section
XIII of this chapter.)

Through the purchase of 500 worth of articles of consumption by
labourer II, capitalist II recovers the value of 500 IIv — which he just
possessed in commodities — in money, the form in which he advanced it
originally. The immediate result of this transaction, as of any other sale
of commodities, is the conversion of a given value from the form of
commodities into that of money. Nor is there anything special in the
reflux thus effected of the money to its point of departure. If capitalist II
had bought, with 500 in money, commodities from capitalist I, and then
in turn sold to capitalist I commodities to the amount of 500, 500
would have likewise returned to him in money. This sum of 500 in
money would merely have served for the circulation of a quantity of
commodities (1,000), and according to the general law previously
expounded, the money would have returned to the one who put it into
circulation for the purpose of exchanging this quantity of commodities.

But the 500 in money which flowed back to capitalist II are at one
and the same time renewed potential variable capital in money-form.
Why is this so? Money, and therefore money-capital, is potential variable
capital only because and to the extent that it is convertible into labour-power.
The return of £500 in money to capitalist II is accompanied by
the return of labour-power II to the market. The return of both of these at
opposite poles — hence also the re-appearance of 500 in money not only
as money but also as variable capital in the form of money — is conditional
on one and the same process. The money equal to 500 returns
to capitalist II because he sold to labourers II articles of consumption
amounting to 500, i.e., because the labourer spends his wages to
maintain himself and his family and thus his labour-power. In order to
be able to live on and act again as a buyer of commodities he must
again sell his labour-power. The return of 500 in money to capitalist II is
therefore at the same time a return, or an abiding, of the labour-power in
the capacity of a commodity purchasable with 500 in money, and
thereby a return of 500 in money as potential variable capital.

As for category IIb, which produces articles of luxury, the case with
v — (IIb)v — is the same as with Iv. The money, which renews for capitalists IIb their variable capital in the form of money, flows back to
them in a round-about way through capitalists IIa. But it nevertheless
makes a difference whether the labourers buy their means of subsistence
directly from the capitalist producers to whom they sell their labour-power
or whether they buy them from capitalists of another category,
through whose agency the money returns to the former only by a circuitous
route. Since the working-class lives from hand to mouth, it buys
as long as it has the means to buy. It is different with the capitalists, as
for instance in the exchange of 1,000 IIc for 1,000 Iv. The capitalist does not live from hand to mouth. His compelling motive is the utmost self-expansion of his capital. Now, if circumstances of any description seem
to promise greater advantages to capitalist II in case he holds on to his
money, or to part of it at least, for a while, instead of immediately
renewing his constant capital, then the return of 1,000 IIc (in money) to
I is delayed; and so is the restoration of 1,000v to the form of money,
and capitalist I can continue his business on the same scale only if he
disposes of reserve money; and, generally speaking, reserve capital in
the form of money is necessary to be able to work without interruption,
regardless of the rapid or slow reflux of the variable capital-value in
money.

If the exchange of the various elements of the current annual
reproduction is to be investigated, so are the results of the labour of the
preceding year, of the labour of the year that has already come to a
close. The process of production which resulted in this yearly product
lies behind us; it is a thing of the past, incorporated in its product, and
so much the more is this the case with the process of circulation, which
precedes the process of production or runs parallel with it, the
conversion of potential into real variable capital, i.e., the sale and
purchase of labour-power. The labour-market is no longer a part of the
commodity-market, such as we have here before us. The labourer has
here not only already sold his labour-power, but besides the surplus-value
also supplied an equivalent of the price of his labour-power in the
shape of commodities. He has furthermore pocketed his wages and
figures during the exchange only as a buyer of commodities (articles of
consumption). On the other hand the annual product must contain all
the elements of reproduction, restore all the elements of productive
capital, above all its most important element, the variable capital. And
we have seen indeed that the result of the exchange in regard to the
variable capital is this: By spending his wages and consuming the
purchased commodities, the labourer as a buyer of commodities
maintains and reproduces his labour-power, this being the only
commodity which he has to sell. Just as the money advanced by the
capitalist in the purchase of his labour-power returns to him, so labour-power
returns to the labour-market in its capacity of a commodity
exchangeable for money. The result in the special case of 1,000 Iv is
that the capitalists of I hold 1,000v in money and the labourers of I offer
them 1,000 in labour-power, so that the entire process of reproduction
of I can be renewed. This is one result of the process of exchange.

On the other hand the expenditure of the wages of the labourers of I
relieved II of articles of consumption to the amount of 1,000c, thus
transforming them from the commodity-form into the money-form.
Department II reconverted them into the bodily form of its constant
capital by purchasing from I commodities equal to 1,000v and thus
restoring to I in money-form the value of its variable capital.
The variable capital of I passes through three metamorphoses, which
do not appear at all in the exchange of the annual product or do so only
suggestively.

1) The first form is 1,000 Iv in money, which is converted into labour-power
of the same value. This conversion does not itself appear in the
exchange of commodities between I and II, but its result is seen in the
fact that working-class I confronts commodity seller II with 1,000 in
money, just as working-class II with 500 in money confronts commodity
seller of 500 IIv in commodity-form.

2) The second form, the only one in which variable capital actually
varies, functions as variable capital, where value-creating force appears
in the place of given value exchanged for it; it belongs exclusively to the
process of production which is behind us.

3) The third form, in which the variable capital has justified itself as
such in the result of the process of production, is the annual value-product,
which in the case of I is equal to 1,000v plus l,000s, or 2,000
I(v + s). In the place of its original value of 1,000 in money we have a
value of double this amount, or 2,000, in commodities. The variable
capital-value of 1,000 in commodities is therefore only one half of the
value produced by the variable capital as an element of the productive
capital. The 1,000 Iv in commodities are an exact equivalent of the
1,000 in money originally advanced by I and intended to be the
variable part of the aggregate capital. But in the form of commodities
they are money only potentially (they do not become so actually until
they are sold), and still less directly are they variable money-capital.
They eventually become variable money-capital by the sale of the
commodity 1,000 Iv to IIc, and by the early re-appearance of labour-power as a purchasable commodity, as a material for which 1,000 in
money may be exchanged.

During all these transformations capitalist I continually holds the
variable capital in his hands; 1) to start with as money-capital; 2) then
as an element of his productive capital; 3) still later as a portion of the
value of his commodity-capital, hence in the form of commodity-value;
4) finally once more in money which is again confronted by the labour-power
for which it can be exchanged. During the labour-process the
capitalist is in possession of the variable capital as active value-creating
labour-power, but not as a value of a given magnitude. But since he
never pays the labourer until his power has acted for a certain length of
time, he already has in hand the value created by that power to replace
itself plus the surplus-value before he pays him.

As the variable capital always stays in the hands of the capitalist in
some form or other, it cannot be claimed in any way that it converts
itself into revenue for anyone. On the contrary, 1,000 Iv in commodities converts itself into money by its sale to II half of whose constant capital
it replaces in kind.

What resolves itself into revenue is not variable capital I, or 1,000v in
money. This money has ceased to function as the money-form of
variable capital I as soon as it is converted into labour-power, just as the
money of any other buyer of commodities has ceased to represent
anything belonging to him as soon as he has exchanged it for
commodities of still other sellers. The conversions which the money
received in wages goes through in the hands of the working-class are not
conversions of variable capital, but of the value of their labour-power
converted into money; just as the conversion of the value (2,000 I(v + s))
created by the labourer is only the conversion of a commodity belonging
to the capitalist, which does not concern the labourer. However, the
capitalist, and still more his theoretical interpreter, the political
economist, can rid himself only with the greatest difficulty of the idea
that the money paid to the labourer is still his, the capitalist’s. If the
capitalist is a producer of gold, then the variable portion of value — i.e.,
the equivalent in commodities which replaces for him the purchasing
price of the labour — appears itself directly in the form of money and can
therefore function anew as variable money-capital without the circuitous
route of a reflux. But so far as labourer II is concerned — aside from the
labourer who produces articles of luxury — 500 v exists in commodities
intended for the consumption of the labourer which he, considered as
the collective labourer, buys directly again from the same collective
capitalist to whom he sold his labour-power. The variable portion of
capital-value II, so far as its bodily form is concerned, consists of articles
of consumption intended mostly for consumption by the working-class.
But it is not the variable capital which is spent in this form by the
labourer, it is the wages, the money of the labourer, which precisely by
its realisation in these articles of consumption restores to the capitalist
the variable capital 500 IIv in its money-form. The variable capital IIv is reproduced in articles of consumption, the same as the constant capital
2,000 IIc. The one resolves itself no more into revenue than the other
does. In either case it is the wages which resolve themselves into revenue.

However it is a momentous fact in the exchange of the annual
product that by the expenditure of the wages as revenue there is restored
to the form of money-capital in the one case 1,000 IIc, likewise, by this
circuitous route, 1,000 Iv and ditto 500 IIv, hence constant and variable capital. (In the case of the variable capital partly by means of a direct
and partly by means of an indirect reflux.)